Milan Thomas, an ADB economist who specializes in social sector impact evaluation, and Yangchen C. Rinzin, a research fellow at the Centre for Bhutan and Gross National Happiness Studies, answer questions about the use of Bhutan’s Gross National Happiness index.
Bhutan is a small, landlocked kingdom with an outsized profile on the global stage due to its unique development philosophy. The country has a centuries-long history of viewing happiness as a core responsibility of government. The Gross National Happiness (GNH) Index was formally adopted as a development indicator in Bhutan’s 2008 Constitution and up until last year, Bhutan’s tourism slogan was “Happiness is a Place.” March 20 is International Day of Happiness, a global celebration of happiness organized by the United Nations.
Fundamentally, the Gross National Happiness Index is a multi-dimensional poverty index – it aggregates Bhutan’s performance across nine domains and 33 development indicators into a single number.
Bhutan measures happiness by periodically surveying about 10% of the population and compiling statistics that fall under nine domains: living standards, health, education, environment, community, time-use, psychological well-being, governance, and culture. Under each domain, there are several indicators. For example, the living standards domain is comprised of income, asset ownership, and housing. None of the 33 indicators measure happiness directly (although an indicator under the psychological well-being domain based on the Gross National Happiness survey questions about life satisfaction comes close to some definitions of happiness). Rather, the nine domains were determined by the 2007 government commission that designed the index and seen as capturing enabling factors for happiness.
For each of the 33 indicators, there is a cut-off for determining whether an individual has reached a sufficient level. For example, sleep sufficiency is set at 8 hours per day. Indicators within a domain are weighted to determine sufficiency for the domain as a whole, and a surveyed individual is deemed happy if they achieve sufficiency in at least six of the nine domains. This individual-level information is then transformed into a single measure for the population: the Gross National Happiness Index. The index ranges from 0 (if all surveyed individuals have insufficient achievement in all nine domains) and 1 (if all surveyed individuals have sufficient achievement in all nine domains).
The Gross National Happiness Index provides an alternative approach to measuring development, and addresses several shortcomings of GDP. For example, while GDP will always rise when industrial production comes at the cost of environmental degradation, Gross National Happiness may fall because it takes people’s experience of their natural surroundings into account. In addition, while GDP values only market labor, Gross National Happiness takes other uses of time into account. Crucially, unpaid work factors into the calculation of total time spent on work, which determines whether an individual has sufficient leisure time. Given the disproportionate burden of domestic work on women, this makes the Gross National Happiness Index more gender-sensitive than GDP.
A key difference between Gross National Happiness and GDP is that Gross National Happiness has a maximum value (1, which is reached when all citizens have achieved sufficiency in at least six of the nine domains), whereas GDP can grow without limit. Once all citizens pass the income sufficiency threshold (which was set at 1.5 times the national poverty line), additional income does not raise Bhutan’s Gross National Happiness Index, and resources would be better used to invest in other domains rather than continuing to raise income. In theory, this has deep implications for development policy: programs designed to maximize Gross National Happiness will prioritize equitable pursuit of universal basic needs over growth in material consumption.
However, global measures of happiness and GDP tend to be strongly correlated. This is unsurprising since both happiness and GDP are related to individuals’ ability to meet basic needs like food and shelter. For 141 countries with available data for 2020, per capita GDP accounted for 55% of the variation in average self-reported happiness. But that is based on cross-country evidence for a single year, using a different measure of happiness than Bhutan’s (self-reported happiness on a 1-10 scale rather than Bhutan’s more complicated Gross National Happiness Index). The relationship between Gross National Happiness and GDP over time for Bhutan appears weak according to a 2019 study by the International Monetary Fund. This underscores the importance of tracking the Gross National Happiness Index and not focusing solely on GDP.
Just as economic development measured by GDP varies substantially within countries, the Gross National Happiness Index has shown consistent patterns for population subgroups in every Gross National Happiness survey year so far (2008, 2010, and 2015). It is markedly higher for the urban population than for the rural population, with farmers prominent as the least happy occupation in 2015 (only 33% of farmers were classified as happy in 2015). The Gross National Happiness Index tends to be higher in northern districts than eastern districts, where poverty rates are highest.
There are also demographic differences in the Gross National Happiness Index. The Gross National Happiness Index is 9% higher for men than for women, with a male advantage across all nine domains and particularly marked gap in education and time use. It is lower for the elderly than younger age groups, and higher for educated individuals than those without formal schooling.
These observations on within-country differences in the Gross National Happiness Index are valuable for planning government programs, both in terms of geographic and demographic targeting. But the government sets some goals based on Gross Domestic Product, just like any other country. An ambitious long-term goal of quadrupling the size of the economy by 2034 is currently under consideration, and macroeconomic monitoring tracks GDP growth. None of this is inconsistent with Gross National Happiness philosophy, as assets and income are two of the 33 Gross National Happiness indicators.
But Gross National Happiness plays a prominent role in economic planning as well, especially when it comes to installing social and environmental safeguards into Bhutan’s public policies. Businesses are awarded Gross National Happiness certificates for having operations aligned with the nine domains of Gross National Happiness. 17 targets in Bhutan’s current Five-Year Plan are based on Gross National Happiness indicators, and policies and projects are screened based on their implications for Gross National Happiness. This is most evident in Bhutan’s portfolio of development projects, which prioritizes development of renewable energy sources and protection of biodiversity. Preservation of culture and environment are also driving forces behind Bhutan’s recently adopted “high value, low volume“ approach to tourism.
When the first Gross National Happiness survey was conducted in 2008, the Index was 0.73. The Index rose to 0.74 in 2010 and to 0.76 in 2015. The planned 2021 survey was delayed by the COVID-19 pandemic, so an updated Gross National Happiness Index is unavailable, and it cannot be said with certainty whether the upward trend in happiness has continued over the past seven years.
However, the latest Bhutan Living Standards Survey (conducted in 2022) contains several indicators that suggest Bhutan continued to build enabling factors for happiness from 2017 to 2022. For instance, home ownership (a key indicator under the living standards domain) increased from 57% in 2017 to 58% in 2022 despite the economic hardship wrought by COVID-19 disruptions. The rate of health service access (a key indicator under the health domain) for those who suffered illness or injury increased from 72% in 2017 to 91% in 2022. Social safety net programs, such as cash transfers through the King’s emergency income support program, were likely instrumental for ensuring such social indicators did not slide during the pandemic.
The Gross National Happiness approach that Bhutan formally adopted in 2008 was trailblazing in that it provided the world with proof-of-concept for moving beyond GDP measurement and taking a holistic view of social development. Many of the principles underlying the Gross National Happiness Index are founded in the tenets of Vajrayana Buddhism (the state religion of Bhutan), and there is still room for debate on the included domains, the chosen indicators for each domain, and the sufficiency thresholds for each indicator. Other countries have constructed their own versions of happiness indices, reflecting different visions for what socioeconomic development means and the constantly progressing scientific understanding of the determinants of happiness.